Question

The following material standards have been established for a particular product: Standard quantity per unit of output... 6.8 Meters Standard Price...$14.40 per Meter



The following data pertain to operations concerning teh product for the last month:

Actual materials purchased... 4,400 meters

Actual cost of materials purchased... $60,500

Actual materials used in production...3,800 meters

Actual output...400 units



Q: What is the materials price variance for the month?

A:$14,850 U

B:$8,250 U

C:$8,640 U

D:$2,860 F

Answer 1

Answer:

$2,860

Explanation:

Direct materials price variance = (SP – AP) * AQ

Where SP = Standard Price

AP = Actual Price

AQ = Actual Quantity

SP = $14.4

AP = Actual Cost of material purchased ÷ Actual Quantity of material purchased

AP = 60500 ÷ 4400

AP = $13.75 per meter

Materials price variance

= AQ * (AP - SP)

= 4,400 * ($14.40 - $13.75)

= 4,400 * ( $ 0.65 )

= $2,860